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Digest Finance
 

Analyzing the Impact of Corporate Governance Factors on Enterprise Value and Capitalization

Vol. 26, Iss. 3, SEPTEMBER 2021

PDF  Article PDF Version

Received: 12 July 2021

Received in revised form: 2 August 2021

Accepted: 10 August 2021

Available online: 30 September 2021

Subject Heading: RISK, ANALYSIS AND EVALUATION

JEL Classification: G32, G34

Pages: 291–309

https://doi.org/10.24891/df.26.3.291

Ol'ga D. KOSORUKOVA Moscow University for Industry and Finance Synergy (Synergy University), Moscow, Russian Federation
olga.kosorukowa@yandex.ru

https://orcid.org/0000-0001-8680-0727

Subject. The article focuses on business valuation methods and factors with reference to corporate governance principles.
Objectives. I analyze how corporate governance factors influence the value and capitalization of public joint-stock companies, and make my suggestions concerning financial and administrative decisions in line with value-based management.
Methods. The study is based on methods of synthesis, deduction, induction, statistical analysis, comparison and generalization.
Results. Having analyzed the impact of such factors, as revenue, dividends paid, return on sale and equity, for an 11-year life span (2009–2019), on capitalization and value of the population made up of 20 Russian public joint-stock companies from four sectors, as classified by the number of owners and State interest, I figured out that capitalization enterprise value in Russia most of all depend on indicators of companies if it has 11 owners and more (71%), companies without the State interest (67%). As for basic factors, these are revenue and dividend policy that have the strongest effect on enterprise value, while capitalization depends on all the analyzable factors.
Conclusions and Relevance. Currently, business valuation and business valuation management are critical for making correct strategic administrative decision. Doing so, the appraiser shall not only measure enterprise value with available financial results, but also consider its various non-financial indicators, which inter alia include corporate governance. Based on corporate governance principles set forth in the Letter of the Bank of Russia, I pointed out that definitely influence the enterprise value. Based on the above analysis, I determined what best results the Russian public joint-stock companies can attain in their corporate governance by sector, the number and quality of owners. Following the findings, I suggest how financial and administrative decisions on enterprise value management should be made, in line with the value-based management principles.

Keywords: corporate governance, business capitalization, enterprise value, enterprise value management factor

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